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 What's New

The rising costs of exclusive TV content should no longer be the bugbear it once was once Pay TV operators are required by the Media Development Authority (MDA) to cross‐carry each other's exclusive content later this year. In our view, the biggest beneficiary of the latest change in government regulation will be M1 (BUY, TP $2.45) which will now be able to compete equally with SingTel and Starhub. We also see more advantages for SingTel (BUY, TP $3.42) than Starhub (SELL, TP $1.80).

Our View

In our view, the change in ruling is advantageous for SingTel. Critically, SingTel's exclusive rights to broadcast the EPL are not affected as it acquired the rights last year. The new cross‐carriage ruling applies only to exclusive content acquired or renewed after 12 March 2010.

In the short term, the damage to Starhub is mostly to sentiment as it has locked in key content in multi‐year exclusive contracts, hence margins should stabilise and even improve this year. However, the lack of clarity on which content is involved, when they were renewed or the length of the contracts will still overhang the stock. In the long term, the impact is negative as Starhub will see its hubbing proposition and ability to offer exclusive content devalued.

With equal access to content and infrastructure (once the Next Generation National Broadband Network or NGNBN is up and running throughout the country), M1's main disadvantage as a pure mobile operator will be removed. We would therefore expect M1 to be the biggest winner (other than the consumer).

Action & Recommendation

We see no reason to change our recommendations. All along, our preference has been for M1 (BUY, TP $2.45) among all the telcos. The MDA's policy change further reinforces our view. SingTel (BUY, TP $3.42) should also reap more benefits fairly immediately compared to what it will lose in the longer term. However, the long term impact on Starhub (SELL, $1.80) is negative.

SingTel, StarHub to double mobile broadband speeds by this year

SINGAPORE Telecom and StarHub aim to upgrade their cellular networks to double mobile data broadband speeds by the end of this year. This will allow users to surf the Web and download applications on their handphones at speeds of up to 42.2 Mbps (megabits per second) – twice as fast as the current 21.1 Mbps limit.

SingTel expects to complete its upgrade by the second half of this year, while StarHub said its network will be ready by the third quarter. Neither company has disclosed the cost of the upgrade.

When contacted, MobileOne said it will be ready for 42.2 Mbps by this quarter.

Although the speed boost can be achieved this year, SingTel’s executive vice-president for consumer business Yuan Kuan Moon said ‘it will take a while for devices to catch up’.

Most smart phones and mobile broadband dongles available today support download speeds of only 7.2Mbps to 14.4Mbps.

‘We are talking to all the major (handset) providers,’ Mr Yuan told reporters at a media briefing.

Swedish telecom equipment maker Ericsson clinched the upgrading contract with SingTel, while StarHub chose to go with China’s Huawei.

Besides the ongoing improvements, both operators said yesterday they are also embarking on local technical trials of another technology called Long Term Evolution (LTE). MobileOne launched a similar trial in January this year and it expects its LTE network to be ready in 2011.

LTE is considered by pundits to be the obvious successor to existing third-generation cellular technology. It will allow telcos to offer mobile broadband speeds of 100Mbps or more – a feat that rivals the fastest fixed-line broadband speeds available in Singapore today.

In Europe, Swedish operator Telia has already started on this upgrade, while NTT Docomo plans to launch its LTE network in Japan by the end of the year.

‘While we are committed to LTE for the future growth of our network, the upgrade of our existing HSPA+ network to 42Mbps DC (dual-carrier) is relatively straightforward and will provide peak data rates for our customers comparable to that which can be achieved with current LTE technologies,’ a StarHub spokeswoman said.